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Economy

Government taps Abenomics supporter for the bank's policy board

TOKYO -- The government has nominated an outspoken advocate of monetary stimulus to the Bank of Japan's policy-setting board, signaling its unflagging support for a central bank fighting an uphill battle against deflation.

     The nomination of Yutaka Harada was submitted to the Diet on Thursday, and is expected win approval by the lower and upper houses of the Diet, both of which are controlled by the ruling coalition. Harada is set to succeed Ryuzo Miyao, who is ending his term on March 25.

     Chief Cabinet Secretary Yoshihide Suga told a news conference that the new nominee "is right for the job."

     The Waseda University professor is one of Japan's most prominent reflationary economists, together with BOJ Deputy Gov. Kikuo Iwata. Harada has countered critics who say that the additional easing measures announced last October excessively weakened the yen, defending the role of monetary policy.

     He recently co-authored a book arguing that reflationary policy, which in Japan focuses mainly on expanding the money supply, was the key to saving the languishing economy.

     "They probably realized that they needed someone who wouldn't object to [BOJ Gov. Haruhiko] Kuroda's easing policies," said Izuru Kato of Totan Research.

     Harada will serve on the board for five years. He is the third member to be appointed by the Abe government, after Kuroda and Iwata.

     Generally, policy board members are nominated through careful deliberations between the BOJ, the Finance Ministry and the prime minister's office. But Harada's nomination was decided almost unilaterally by those close to Abe.

     "There's nothing for us to do," an official at the central bank said wryly back in mid-January.
 
     The Abe government was put on edge after the bank's board decided on additional easing back in October by a narrow 5-4 vote. Etsuro Honda, one of Abe's key advisers, has said finding the right replacement for Miyao an "extremely important personnel decision."

     Yoshihisa Morimoto, who voted against monetary easing, is also ending his term, on June 30. Many, including another Abe adviser, Koichi Hamada, have criticized board members like Morimoto who came from the business or financial sectors for prioritizing industry interests. The prime minister's office will likely send in another reflationist to replace him.

     These moves are fueled by concerns that the BOJ could roll back its monetary easing once Kuroda and Iwata end their tenures in the spring of 2018. "The new direction adopted by the bank's direction will unlikely change while Abe stays in office," said a BOJ official.

(Nikkei)

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